Indonesia government allows foreigners to own property in Indonesia with the terms and conditions are applied. However, there are some consequences of having property in Indonesia that foreigner should know to avoid any problems in the future.

As we living in this globalization era, we cannot deny the fact that the waves of foreigners coming into this country were very big. Foreigners who have decided to reside might be considering to invest in various kind of sectors, which one of them is in the property sector.

The actual reason why the government allows them to own a property would be as one of the strategies to face competition at the regional level. Since our neighbor countries such as Singapore and Malaysia have also opened access to the property for the foreigners. However, on 19 September 2016, the government has set the requirements and procedures of foreigner having a property in Indonesia through this regulation which issued by the Minister of Agrarian Affairs and Spatial Planning/Head of National Land Agency, it is the Regulation No. 29 of 2016 on Procedure for Granting, Releasing, or Transferring Land Rights over Residential Houses to Foreign Nationals in Indonesia (“Regulation 29”).

By issuing such regulation, the Indonesian government allows foreigners who work or reside legally in Indonesia to acquire a landed-houses in the country for a period up to 80 years. However, foreign ownership of landed houses or apartments falls under the Right of Use category, locally known as Hak Pakai, which is lower level than the Right of Ownership category or Hak Milik that can be acquired by Indonesian citizens only.

Other than that, there are several requirements and consequences related to the ownership of property for foreigners which has been stipulated in the Regulation 29, as follows:

  1. Regulation has set the fixed minimum price for the property per region that can be purchased by the foreigners.
  2. The property cannot be purchased from the second-hand seller, it has to be purchased directly from the developer.
  3. Foreigners are not allowed to rent out property in Indonesia to a third-party. The property which owned by a foreigner must be used as a place to stay while they were working or studying in Indonesia. They may not use their property only as an investment.
  4. They are allowed to make their property as a mortgage in Bank or Indonesian financial institution.
  5. If the foreigners are about to leave Indonesia, he or she needs to release or transfer the Right of Use to another person who meets all requirements to own property in Indonesia (this can be another foreigner or an Indonesian citizen) within one year after his or her departure from Indonesia. Otherwise, the property will be auctioned by the state.
  6. Foreigners can buy a landed house in Indonesia for an initial period of 30 years, which can be extended twice, once by another period of 30 years and then by a 20-year period.

Moreover, on the last October 2017, the Indonesian government verbally set to propose a new provision in a land bill that will allow foreigners to own properties under the Right to Build category or Hak Guna Bangunan. Right to Build allows the owner to build and own the building. It is way more advantageous for foreigner and also has a higher level than the Right of Use. However, there is have not any stated regulation yet regarding this matter.

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Author: Windi Saptarani